I'm on the fence-help push me to a side---

8 Replies

Here's the deal--- accepted offer for 42,500 in upstate ny. Buy and hold ---

   Cozy (small ) 3 bedrm, 1 bath,  basement:

Pros:         * Rent will be almost 2% of PP ($ 750-800 )

                  *Recent upgrades include: siding, windows, furnace,floors, kitchen appic.

                   all in past 7 years

                   * B or B-  area

Cons:        *Corner lot (?)

                * Not the most attractive block in the hood due to 4 of 7 homes being 

            seasonal cabins,  (incl 2 abandoned ones)

            * Will be hard to re-sell due to the way it looks (modern-- not cute cabin , rustic look is what buyers in that area want).

Thoughts very appreciated!

Not enough info.  The 1%/2% rules are not rules...they are guidlines to help see on "preliminary analysis" whether a property works or not.  You needthe actual numbes to do a true anaylysis.  Otherwise you're just guessing.

Rent

Taxes/insurance

PM cost

financing cost

misc reoccuring monthly costs

Hi @Marci Stein  . Is the area so rustic/rural that you will have a hard time finding good renters? If not, the numbers look good.  Make sure you calculate for a realistic vacancy factor.  I know what you mean having a unique property when time to sell.  With these numbers, you could have a paid off house in no time.  What is your holding timeframe? >5 yrs? >10yrs?  The longer it is, the less re-selling would factor into my buying decision.  Congrats and good luck!

Joe--more info---no PM or financing costs-cash deal. 

taxes and insur equal $310 a month. will have the house paid off in 7-8  years.

the problem is it will be hard to sell it. this has been on the market for 5 years will no buyers because of the above reasons.

Steve--yes, in a very rural arae it is hard to find good tenants, but they do exist. After evicting people from my 2 other houses up there, 

i finally found tenants who pay me every month on the 1st :)

Originally posted by @Marci Stein :

Joe--more info---no PM or financing costs-cash deal. 

taxes and insur equal $310 a month. will have the house paid off in 7-8  years.

the problem is it will be hard to sell it. this has been on the market for 5 years will no buyers because of the above reasons.

Steve--yes, in a very rural arae it is hard to find good tenants, but they do exist. After evicting people from my 2 other houses up there, 

i finally found tenants who pay me every month on the 1st :)

The problem is, it will take you 8 years to break even. 750-310 = 440/month or 5280/yr. You realize that, by your own admission, you are going to have a problem selling...and during those 8 years, what if you have any CAPEX surprises? If you plan on leaving your cash in the property, then this is a slow bleed to death. Your best scenario is what...wait 8 years to get even, no CAPEX or vacancies during those 96 months (payments), then sell (maybe) for what? There is no guarantee what you will be able to sell for in 8 years, so I wouldn't bank on that as my exit strategy of choice.

On the other hand, since you are buying it all cash, why not refi your cash back out right away?  The debt service on it (30 years; 4.5%) would be 215/month, so you would be cash flowing around 225/month still...but have no cash in the property anymore.  So from the time you refi, all your cash flow is pure profit...and your tenant is paying off your debt (buying the property for you).  Now, you can sell at a time when the market dictates it is right...which could be 8 years, 20 years, or 1 year.  You are in control...not the property.

I would also the other unit in the area.  That is, you buy more and help turn the area around.   Thus you increase the value of your original and subsequent purchases there.  That would make a sought of developer. 

I will be honest, we haven't invested in areas yet that we couldn't INSTANTLY sell out. There has been an area that we have been eyeing but havent investment because of the resale lack of potential. No to say we won't eventually but it has been why we have been holding back.

That being said, great investors are those who can see potential when other can't. So if you think it will work. Have a good business plan go for it.

I wouldnt buy anything with that little liquidity. 

Well it feels like I have been pushed to the "No" side.

I don't want to wait 8 years to see start to my money again. 

Joe, I agree it's a "slow death"..and 

 it's not easy to cash out on a rural property with liitle self employement income---

I've been trying damn hard on my other property and have not been able to to do that yet.

thank you everyone for your feedback.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.